Chemicals

I. Agricultural Chemicals

MARKET OPPORTUNITIES:
Market Demand
China’s accession to the WTO provides benefits to U.S. fertilizer exporters. On accession, tariffs dropped 6% from the 11% import duty rate. On September 19, 2007, China’s Ministry of Commerce (MOFCOM) released the 2008 fertilizer import tariff rate quotas (TRQs). The total 2008 TRQs will be 3.3 million tons of urea imports, 6.9 million tons of diammonium phosphate (DAP) and 3.45 million tons of NPK compound fertilizers. Of the TRQs, 2.97 million tons of urea, 3.8 million tons of DAP and 1.76 million tons of NPK are for state trading while non-state trading TRQs will be 330,000 tons of urea, 3.1 million tons of DAP and 1.69 million tons of NPK. The import volumes within the quota are levied an import duty of 1%, while imports exceeding the quota are levied a duty of 50%.

Based on the WTO commitment, China started to allow foreign companies to gain the right to retail and distribute fertilizers starting on December 11, 2006. China’s fertilizer circulation field will face more fierce competition. In the telephone interview with a U.S. fertilizer exporter, its experts held that it is a great positive move and will untie their company in China market. Fertilizer exporters should apply to MOFCOM for license to be authorized to retail and distribute fertilizer in China. It will bring more business opportunities to U.S. exporters in China.

Best Prospects
Fertilizers:
The local producers have yet to meet the growing local market demand, especially for phosphate and potassium fertilizer, which are limited natural resources. China still must rely on importing fertilizers in large quantities.

• Nitrogen fertilizer
• Phosphate fertilizer
• Potash fertilizer

Pesticides:
High efficiency, low toxicity pesticides have strong market prospects. Although domestic output of pesticides satisfies local demand in most areas, domestic production of high efficiency herbicides, high-efficiency and low-toxicity insecticides and fungicides cannot meet the demand both in terms of quantity and quality. Some raw pesticides and intermediates rely on imports, such as aniline with o-dihydroxybenzene, furphenol and tripoly-nitrogen-chlorine dialdyl. It is imperative for China to stop the application and production of highly-toxic pesticides, especially organo-phosphorous biocides, since the high-toxic pesticides take up about 36% of the country's total consumption.

• Herbicides
• Environmentally safe insecticides
• Biopesticides
• New technologically advanced pesticides

Because the Chinese government now emphasizes environmentally sound technologies, pesticides will have to meet new requirements.

II. Industrial Chemicals

MARKET OPPORTUNITIES:
Market Demand
Over the past several years, China has experienced steady growth in both the import and export of chemicals. According to the International Council of Chemical Associations, China is the eighth largest chemical importing nation and the twelfth largest chemical exporting nation in the world. The United States is the only leading exporting country that enjoys a slight trade surplus with China in the area of chemicals. It is expected that China will continue rely on imports in the foreseeable future.

Best Prospects
Fine and Specialty Chemicals
The fine and specialty chemical industry is a development priority within China’s chemical sector. Fine chemicals are composed of high purity components, and are used for personal hygiene, medical purposes, or water treatment, whereas specialty chemicals are manufactured for a specific use, such as adhesives or dyes. Both types are produced in lower volume than bulk chemicals.

The Chinese fine and specialty chemical industry still remains highly fragmented. The top ten producers control only five percent of global capacity. Currently, domestically produced fine and specialty chemicals cannot satisfy China’s rapidly growing demand. As a result, China needs to import many types of fine and specialty chemicals, while also investing in domestic production facilities and encouraging cooperation with foreign corporations for certain chemical projects.

The development of the fine and specialty chemical industry has been restricted by the shortage of applied research, technical services, marketing expertise, and funds. Domestic products often cannot provide the range of products needed nor meet quality requirements for chemicals used in the production of export goods.

Organic Chemicals
Organic chemicals constitute another promising export market in China. Major organic chemical products in China include ethylene, propylene, styrene, and polyvinyl chloride. But the main hindrance of Chinese organic chemical production is inefficient factories with obsolete technology. As a result, organic chemical imports have been increasing steadily since 2000.

Synthetic Materials
Synthetic materials, including high quality fibers and rubbers, also present a significant export opportunity. Many Chinese chemical factories currently produce these products, but at a rate only sufficient enough to fulfill about half of domestic demand per year. Local products are also inconsistent in quality and can be highly toxic. Foreign products have a good reputation in the China market for their good quality and after-sales service. For example, China’s main tire manufacturers all use imported accelerants because of their consistent levels of quality.

III. Plastic Materials and Resins

MARKET OPPORTUNITIES:
Market Demand
Special engineering plastics and other resins that possess special physical and chemical properties are used widely in various industries. U.S. engineering plastics products have high-technology input and are very competitive in the local market. However, U.S. firms now face stiff competition from Japan, Korea and Taiwan, German. I n recent years, imports of general plastics from the U.S. dropped sharply due to price competition and the close relationship between Asian competitors and China. Meanwhile, China has become the largest importer of engineering plastics in the last three successive years. Up to 2005, the demand for the five major engineering plastics (PC, POM, PA, PBT and PPO) and ABS will increase to 590,000 t/a and 1.6mt/a.

Best Prospects
Synthetic Resins
China needs to import large amounts of synthetic resins to meet local market demand. In 2006 for the January to November period, China’s imports of general plastic products totaled USD 34.1 billion, an increase of 12.4% from the previous period. Imports from the United States represented 8.26% of the total, just behind Taiwan, Korea, and Japan. China’s imports of PVC reached a value of USD 1.4 billion in 2006, a decrease of 9.4% over 2005. Meanwhile, China has become the largest importer of engineering plastics in the last three successive years.

Due to rapidly expanding production capabilities, PVC supplies have overtaken demand. China’s imports of PVC have also been decreasing by 10% a year since 2004. In 2006, government’s tightening macroeconomic policy has hit the real estate industry, decreasing construction demand for PVC. This trend is likely to continue into 2007, where macro policies on environmental and energy issues will also influence the PVC market.

The local market requires imports of general-purpose thermoplastic resins, including polyethylene (LDPE and HDPE), polypropylene (PP), polystyrene (PS), acrylonitrile butadiene styrene (ABS), and polyvinyl chloride (PVC). This market is subject to fluctuation of up-stream supply and down-stream market demand.

In 2007, plastics and plastic products ranked as China’s 5th largest import category (Harmonized Schedule 2-digit level) from the United States, with a total value of 3,600 million USD.

The top 3 Chinese plastic imports are:

• Polyethylene
• Polyacetals
• Polypropylene

IV. Petrochemicals

For more details, visit the US Commercial Service China site under the heading “Oil and Gas,” at the following link:http://www.buyusa.gov/china/en/oilgas.html

Major Shows & Exhibitions

Food Ingredients China
June 23-25, 2009
Shanghai
http://www.fi-events.com

ChinaPlas - 23rd International Exhibition on Plastics and Rubber Industries - Certified show
May 18 - 21, 2009
Guangzhou
www.chinaplasonline.com

The 11th Asian-Pacific Int'l Plastics & Rubber Industry Exhibition
25th Nov-28th Nov, 2009
China · Shanghai New International Expo Center
http://www.applas.com.cn/applas/index.asp

CHINACOAT (The China Int'l Exhibition for Coatings, Printing Inks and Adhesives)
Nov 18-20, 2009
Shanghai New International Expo Centre (SNIEC)
2345, Longyang Road, Pudong New Area, Shanghai
http://www.chinacoat.net

Market Research Reports

Powder Coatings Industry
China: Adhesive Industry

Useful Websites

• Chemease – Information on Chinese Chemical Commodity Market
• Chemical B2B Website
• China Agricultural Means of Production Net
• China Chemical Information Center
• China Chemical Information Net
• China Engineering Plastics Industry Association
• China Fertilizer Information Net
• China National Chemical Industry Information Center
• China Plastic Processing Industry Association (CPPIA)
• The Fertilizer Institute (TFI)
• Global Chemical Portal and Network
• International Fertilizer Association (IFA)
• Recycle China